Shareholders' meeting to decide KPC's future
Shareholders' meeting to decide KPC's future
JAKARTA (JP): The shareholders of coal mining company PT
Kaltim Prima Coal in East Kalimantan will meet here to decide on
the company's future, following failed efforts to end a dispute
with striking workers.
KPC representative for Jakarta, Bambang Susanto said on Monday
representatives of KPC's shareholders Anglo-Australian mining
company Rio Tinto and the British-American oil and gas company
Beyond Petroleum (BP) would hold a two-day meeting from Tuesday
(today).
"Tomorrow's discussion will likely cover every aspect of this
problem, including the possibility of KPC pulling out from
Indonesia," Bambang told The Jakarta Post.
He said the meeting was part of the company's regular
shareholders meeting, which is held at least twice a year, to
discuss the company's performance.
The giant coal mining company has shut down its coal mine in
Sangatta since Aug. 2, after the company's striking workers re-
established a blockade on the company's production facilities
following a deadlock in negotiations.
The strike, which started in mid June, has forced the company
to stop operations three times, incurring losses amounting to
US$1.65 million.
Bambang said KPC's board of commissioners would also attend
the upcoming meeting.
He said the shareholders had probably made an assessment of
every possible step they could take in response to the mine
blockade.
He said there was a consideration of temporarily laying off
several staff members while mining operations remained at a
standstill.
The meeting would also consider declaring force majeure to the
contract of work signed with the government, he said.
He said that under the force majeure, KPC would be exempted
from contractual obligations of paying taxes, royalties and other
rents to the government.
"The force majeure simply means that KPC will not be able to
pay its full obligation to the government," he explained.
KPC has said earlier that the closure of its coal mine had
cost the government Rp 82 billion (US$9.8 million) in potential
royalties and corporate taxes.
But Bambang said that since no force majeure had been declared
on the contract with the government, KPC remained liable to fully
pay its financial obligations to the government.
Under the force majeure clause of its contract of work,
Bambang said, the company is allowed to extend the life of its
contract to compensate for the force majeuer period.
KPC's contract expires in 2022.
The company declared force majeure for the second time to its
customers last week following its failure to load arriving ships
with coal due to the blockade by the striking workers.
The force majeure status prevents the company from being
charged with penalties because of a breach in its sales contract.
KPC mainly ships its coal to Japan, South Korea and Taiwan,
but it also sends lower volumes of coal to Germany, Italy,
Portugal and the United States.
He said thus far there were no signs as to when negotiations
between the company and the striking workers could resume.
He said KPC stood by its condition that it would not begin any
negotiations while the blockade remained.
"So it all depends on them (the workers)," he added.
The workers have demanded pay hikes and the reinstallment of
daily allowances.
KPC has agreed to meet the demands but insisted on taking
disciplinary measures on the striking workers. This was flatly
rejected by the striking workers. (bkm)